recently speech, Atlanta Fed President Rafael Bostic pulls out the oath jar he keeps in his office. Except this jar is a swear word with one difference: The employee (and, of course, Bostic himself) has to put a dollar into using the dreaded word “transient” every time.
why it matters: as White House Press Secretary Jen Psaki They say, no one really knows what the word T-word means.
- It is generally used in the context of inflation – with the idea that if inflation is transient, the Fed does not need to do anything about it, as it will naturally revert to its long-term trend.
- The problem is that the “transient” thesis is anecdotal, both in theory and in practice – at least if you think that an upward trend inflation for a year or two can be counted as temporary.
big picture: As far as inflation being driven by supply-chain disruptions and/or labor shortages, it is hard to see how monetary policy can bring it down in any event.
- My bubble of thought: Maybe Bostic doesn’t really need a swear jar more than that to admit to the things he can’t change.
go in: Bloomberg’s John Auther Detailed analysis In the latest inflation data. They are very high on a 12-month basis, but exceptional on a 24-month basis compared to the pre-pandemic baseline.